Like a movie monster from the 1970s, inflation is back and drawing crowds at a polling station near you.
Rising prices are the number one concern for voters in this year’s midterm elections, outpacing abortion, crime and other hot-button issues.
More than one in three voters cited inflation as their most pressing priority, according to the latest NPR/PBS Newshour/Marist poll. “Preserving democracy” was a distant second. Republicans were seen as better than Democrats at tackling inflation by a wide margin.
The election comes as consumer prices are climbing at near the fastest pace in four decades. Annual inflation in September was 8.2%. That’s down only slightly from the 9% rate in June, which was the highest since 1981.
The consumer price index for October is set to be released on Thursday.
The surge in prices has fueled anxiety among Americans, who are paying more for gasoline, groceries and other necessities.
Inflation was not on the radar two years ago
Inflation was of little concern when President Biden first took office. Although the pandemic had triggered isolated price increases for things like lumber — the overall cost of living was climbing at less than 2% per year.
The incoming administration was more concerned about jobs — fearing a repeat of the sluggish recovery that followed the global financial crisis. The unemployment rate in January of last year was 6.4% — down from nearly 15% in the early months of the pandemic. But with COVID-19 cases climbing, the economy had lost 115,000 jobs the month before Biden was sworn in.
Congressional Democrats quickly passed a $1.9 trillion economic relief bill, which included direct payments of $1400 to most adults, along with expanded unemployment benefits and a new child tax credit.
As economic stimulus, it was a success. Employers have added more than 10 million jobs since Biden took office. But Republicans blame the aggressive relief bill — which passed with no GOP support — for fueling runaway prices.
“Inflation is caused because of reckless Democrat spending,” Sen. Rick Scott, R-Fla., told NPR’s Morning Edition last week.
Inflation is a global problem
Other factors have undoubtedly contributed to high inflation, including the lingering effects of the pandemic and Russia’s invasion of Ukraine. Inflation has been even higher in the Eurozone and the United Kingdom than in the U.S., largely as a result of soaring energy costs tied to the Ukraine war.
But some prominent Democrats acknowledge that last year’s relief package played a role in overheating the economy and pushing prices higher.
“Now the bathtub is overflowing,” said former Treasury Secretary Larry Summers, who had cautioned his fellow Democrats about just such an outcome. “And it’s much easier to stop a bathtub from overflowing than it is to get the water back.”
The Federal Reserve responds
For much of last year, the Federal Reserve believed that prices would cool off on their own, once supply chain snarls caused by the pandemic came untangled. But inflation proved to be higher and more stubborn than the central bank expected. This spring, the Fed began raising interest rates in an effort to tamp down demand and bring prices under control.
Since March, the Fed has raised its benchmark rate six times, driving up borrowing costs for anyone trying to buy a house or a car or carrying a balance on a credit card. Fed chairman Jerome Powell warned last week that rates will likely have to go even higher than expected next year, although the increases may come in smaller increments.
The Fed’s crackdown, along with similar moves by other central banks, have raised the risk of a global economic slowdown.
A GOP advantage
Nearly half the voters surveyed in the NPR poll say Republicans would do a better job of controlling inflation, compared to just 27% who think Democrats would be more effective. While Republicans have capitalized on voters’ frustration over rising prices, they’ve offered few concrete prescriptions for bringing inflation down.
Asked about the GOP strategy on Morning Edition, Scott suggested spending cuts and increased domestic energy production.
“Step one, we’ve got to do in government what families do. You live within your means,” said Scott, who chairs the Republican Senate Campaign Committee. “On top of that, we’ve got to figure out how to produce energy in this country safely.”
Gasoline prices are a particularly potent symbol of inflation, and President Biden’s approval rating seems to fall whenever pump prices jump.
The average price of gasoline nationwide hit a record high of $5.01 a gallon in June, when sanctions against Russia sent world crude oil prices soaring. Gas prices have since declined to about $3.80, according to AAA.